Do Loft Conversions Add Value?

Loft conversions can add around £100,000 to a home's value

Homeowners who favour improving over moving can easily add around £100,000 to the value of their house, according to new findings by Alliance & Leicester Personal Loans.

Research carried out across England and Wales reveals how homeowners who add a dormer loft conversion to their house are likely to be in a win-win situation. It's cheaper than buying a bigger house, they could see the value of the property go through the roof and they could make significant savings compared to a further advance on a mortgage or a personal loan from the 'Big Four'.

Although there are regional price differences, the UK average cost of a dormer loft conversion is around £23,000* and can add £100,000 to the house's value.  

Potential increase in the average value of homes after the addition of a dormer-style loft conversion**

In London, dormer loft conversions to a three-bedroom home cost around £25,000, but could return a whopping potential profit of nearly £146,000*** - if the homeowner went on to sell their property. The average cost of a loft conversion in the North West stands at £22,080. But it could add £97,888 to the value of the home, give homeowners an extra room and go on to yield a profit of more than £75,000. Similarly in the West Midlands , the cost of converting a three-bedroom home to a four-bedroom home is around £22,000 - but could add more than £100,000 to the value of the property.

Savvy-homeowners who opt to make improvements by taking out a competitive Alliance & Leicester Personal Loan could cash in on their investment when they come to sell, due to the increased value of their property. Alliance & Leicester offers loans of between £7,500 and £20,000 at 6.3% typical APR, which can be a much cheaper option than adding it to a mortgage, potentially saving customers more than £15,000 in interest.  

Richard Al-Dabbagh, Alliance & Leicester Senior Personal Loans Manager, said: "Taking out an Alliance and Leicester Personal Loan in order to fund all, or part of a loft conversion, can be a far cheaper option than moving to a larger house to gain an extra bedroom. Carrying out home improvements instead of moving can have amazing results, potentially increasing the value of your existing property and also saving a great deal of money as well.  

"If you are looking to undertake a sizeable home improvement, there will be a massive temptation to simply take out a further advance on your mortgage. But a personal loan could represent a cheaper alternative for those who can afford higher monthly repayments over the shorter term."

Andrew Thompson, General Manager of the Building Cost Information Service (BCIS), said: "With any work on your home it's crucial to make sure it will be beneficial and add value. While a loft conversion may be cheaper than moving, it can be a project that's disruptive to the household. You also need to carefully consider fire risks and redecorating costs. A surveyor can give you professional advice about building regulations, planning permission and whether the improvement will add value."

For those considering applying for a loan, or switching provider, Alliance & Leicester's website, www.alliance-leicester.co.uk , provides access to useful tools including a Loan Calculator, which enables people work out how much they can afford to borrow and how long they wish to spread their repayments for.  Further information can be found by using the website links below:

* Data provided by The Building Cost Information Service (BCIS), as part of the Royal Institute of Chartered Surveyors.

** Data provided by Hometrack.

*** Profit figure based on increase in value following the conversion of a £278,019 three-bed home London to a four-bed house valued at £448,821, less the cost of the work estimated at £25,000.